The conflict between rival Serbian companies Telekom Srbija and SBB (Serbia Broadband) is nearing its peak. Lawsuits have been announced and business agreements have been reached with the aim of destroying opponents. The government does not want to interfere in the conflict and the opposition accuses the government of stifling free media in what analysts call Serbia's first cable war.

In the “war” are, on the one hand, majority state-owned Telekom Srbija Belgrade, and on the other hand SBB Belgrade and its parent United Media Belgrade, private companies owned by United Group, which in turn is owned by the US private equity fund KKR and the European Bank for Reconstruction and Development (EBRD).

In the latest development, on February 18 Telenor Serbia announced it had filed a lawsuit for unfair market competition, saying it had been the victim of a “false and intensive media campaign” aimed at impeding or preventing Telenor’s entry to the TV content distribution market as a new competitor.

This came after in early February United Media's N1 television announced that it had access to a document in which Telekom Srbija and Telenor Serbia, owned by Czech tycoon Peter Kellner, agreed on business co-operation with the goal of reducing SBB's market share to less than 30%. N1 also claims that the director of Telekom Srbija, Vladimir Lucic, confirmed the existence of a document whose goal is to destroy SBB. According to the agreement, Telekom Srbija plans to provide Telenor with a complete cable network infrastructure and complete cable television content, which, N1 reported based on the document, Telekom Srbija believes would make it impossible to finance SBB media such as N1, Nova S and the Sport Klub channel. 

Analysts agree with this assessment and say that if Telekom Srbija gives Telenor its entire network and all its TV programmes, it is clear that the pair will upset the market balance and thus render SBB completely uncompetitive and thereby manage to take over its customers. In the market of cable operators and TV content in Serbia, SBB currently has a 46.1% share, and Telekom Srbija and related companies 42.5%. But while SBB has a slightly higher market share, Telekom Srbija and Telenor are telecom operators and are therefore stronger than SBB, which is only a cable operator.

This conflict has been going on for a long time. In fact, the beginning of the conflict goes back as far as 2000, when the government of Serbia failed to adopt a long-term strategy for the development of telecommunications. Due to that, the development of cable operators and internet and television providers took place spontaneously in Serbia. Telekom Srbija began to develop its cable network late, while small private companies, such as SBB, conquered the market, expanded and grew. SBB soon became a monopolist in the market, but has been accused of expanding its network in a somewhat “wild” way. 

For example, the deputy mayor of Belgrade, Goran Vesic, pointed to a lawsuit filed by the city of Belgrade against SBB, seeking permission to remove the “illegal network” set up by the operator. 

The cable market developed like this for about ten years. Telekom Srbija was a latecomer, switching from copper to optical cables while SBB was already expanding and growing. Vesic told Info24 that from 2006 to 2016 the city of Belgrade did not issue Telekom Srbija with a single construction permit for the expansion of its network, but SBB was growing. Over time, Telekom Srbija and SBB grew into worthy market opponents, who both had their own cable networks, their own media and televisions, and their own subscribers, but this healthy competition turned into an open conflict when both players reached market share of almost 50%. That is the moment when the Serbia's first cable war actually started.

The open conflict began when each refused to broadcast the TV content of their rival. SBB said it would not broadcast TV Hram on its network, and Telekom Srbija would not broadcast SBB’s N1. The state radio and television RTS is in conflict with SBB too. In fact, before long TV Pink became the only TV channel that was broadcast by both rivals. The situation became even more complicated when the owners of N1 bought TV Pink for Bosnia & Herzegovina and Montenegro, taking the conflict international.

The war between Telekom Srbija and SBB is taking place on two levels. The first is the business level and it implies a struggle for the market and a larger number of users. N1 is an affiliate of CNN, and Telekom Srbija has a contract with EuroNews. United Media has Sport Club channels, and its opponent has Arena Sport. 

The second level is political. Behind Telekom Srbija is the state, specifically President Aleksandar Vucic and his Serbian Progressive Party. On the other hand, SBB and United Media support the opposition, primarily former Belgrade mayor Dragan Djilas. 

In a debate in the Serbian parliament on a report from the Commission for Protection of Competition, SNS MP Ana Carapic commented: "I really can't understand why the 55% of the market share that [former United Group CEO Dragan] Sholak’s SBB has is neither a monopoly nor a dominant position on the market, and the 15% of the market share that Telekom has as a cable operator is a monopoly. Can you tell us that?" Carapic accused Sholak and Djilas of trying to “destroy” Telekom Srbija, which at that time employed 13,000 workers, in order to achieve a monopoly. 

Both sides have about 50 different channels, and the consequence of that conflict is that today half of Serbia watch channels that support the government, while the other half watches programmes that support the opposition.

Conflicts between the Serbian companies have spread beyond Serbia, primarily to the markets of Bosnia and Montenegro. In Bosnia, United Media was fined BAM255,000 for abusing a dominant position when premium sports channels were transferred to Nova BH, and in Slovenia, United Group was fined €3.7mn for delaying the notification of the concentration.

These days, the conflict between Telekom Srbija and SBB and United Media is further complicated. N1 announced that it had an insight into the documents on the merger of Telekom Srbija and Telenor with the aim of destroying SBB. “And while the government publicly swears by European values, it is trying in every way to prevent the existence of free media, this time by destroying a private company,” N1 stated in a comment.

United Group said that it was "shocked by the decision of the companies Telekom Srbija and Telenor, which agreed to co-operate with the goal of destroying the cable operator SBB and United Media, within which the free media N1 and Nova S operate.” They sent a letter to Prime Minister Ana Brnabic and Minister of Culture and Information Maja Gojkovic, informing them that they would inform the competent European institutions about the agreement between Telecom and Telenor with the aim of destroying SBB and United Media.

“After learning that there is evidence of this dishonest business alliance in the form of official documents, United Group will file lawsuits before domestic and international judicial authorities, and will address all relevant institutions in the European Union,” United Group said in a statement. It added that Telecom's participation in the “cartel association to stifle free media in Serbia” is not a surprise, because United Group has been pointing out obstructions, pressures and subterfuges by Telecom for years, claiming the telco “has always had the support of Serbia's highest state officials for its monopolistic behaviour”.

The authorities say they will not interfere in market competition. Meanwhile, Telenor has filed a lawsuit against N1. The two telecom operators reject claims that unfair competition is being created with the aim of removing SBB from the market, adding that this is standard business co-operation, which is the practice in 19 countries in Europe. 

According to Bisnode BH, Telekom Srbija is a financially stronger company, with an annual revenue of €806mn, while SBB's annual revenue is €242mn. An analyst who asked to remain anonymous told bne IntelliNews that in the conflict between Telekom Srbija and SBB it is very difficult to be on someone's side, because both of them are “playing very dirty“.